Adjusted Trial Balance
Note: The adjusted trial balance is similar but distinct from the trial balance.
An adjusted trial balance is essentially a master list that showcases the balances of all accounts, following the posting of adjusting entries at the end of an accounting period.
This process ensures an equal balance of debits and credits, a foundational principle in double-entry bookkeeping. Compiling an adjusted trial balance includes verifying the arithmetic accuracy of the ledger's accounts, and it serves as a preliminary step in the preparation of financial statements. It acts as a bridge between accounting records and financial reporting, highlighting discrepancies and ensuring that transactions are recorded in accordance with the accrual basis of accounting.
The adjustments made might include accruals, deferrals, prepayments, depreciation, and allowances for doubtful accounts. These adjustments ensure that the revenue recognition and matching principles are adhered to, making the adjusted trial balance a critical tool in ensuring the integrity of financial statements.
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